Favorite Schools

Favorite Teams

Greater New Orleans

Change Region

comments

Minority women fueling growth in female entrepreneurship, report says

women business psyche terry

In this photo made Saturday, April 12, 2014, Psyche Terry, owner of Urban Intimates, arranges her products that are for sale at Indulge Your Senses boutique in Little Elm, Texas. Terry participated in The Workshop at MacyÃ¢ÂÂs, a training program that teaches women and minority entrepreneurs how to get their products into major retail stores.
(AP Photo/LM Otero)

Minority women are starting businesses at a faster rate than non-minority women, though their firms tend to be smaller and employ fewer people, according to an American Express OPEN analysis. Even so, minority women are expected to fuel growth in female entrepreneurship in years to come.

According to the analysis, released as part of the company's 2014 State of Women-Owned Business Report, the number of minority women-owned firms in the U.S. more than doubled to 2.93 million from 1997 to 2014.

The analysis was based primarily on U.S. Census Bureau data, including the agency's survey of business owners conducted every five years.

The findings show minority women have gone from helming one out of every six women-owned business to one out of every three.

Julie Weeks, the analyst who authored the report, said that kind of growth is nothing short of "phenomenal" given that it's happened in less than a generation.

Weeks said minority women-owned businesses are on average much smaller than their non-minority counterparts, with the exception of firms run by Asian American women.

But they far outpace women-owned business as whole in both employment and revenue growth, she said.

Employment at minority women-owned business grew by 85 percent, compared with 10 percent for all women-owned businesses. Revenue was up 168 percent, compared with 63 percent for the larger group.

"If you look at the snapshot today non-minority women owned businesses are larger but they're not growing as fast as minority women-owned businesses," Weeks said. "It's that growth that we're talking about."

African-American women made up the largest share of minority female entrepreneurs, helming more than 1.23 million businesses nationwide generating an estimated $49.5 billion in revenue in 2014, according to the report.

But businesses led by Asian American women have a much larger book of business. An estimated 675,9000 Asian American women-led firms generate about $115 billion in revenue.

Latina owners run an estimated 1.03 million businesses that generate about $71.1 billion in revenue.

The report did not consider factors at work behind the growth, but Weeks offered a few conjectures.

She noted the number of women of all colors with work experience has increased significantly.

Women made up about 58.1 percent of the U.S. labor force in 2011. That compared with 41 percent in 1970. Weeks added younger women are achieving higher levels of education. Women surpassed male counterparts in gaining advanced degrees for the first time ever in 2011.

Week said tracing the reasons behind varying rates of entrepreneurship among different ethnicities is more nuanced.

All women-owned businesses face challenges securing working capital for their business, but that can be sharpened in minority communities, she said.

Weeks noted more minority communities are forming their own lending pools to provide support for businesses outside of traditional lending, a trend particularly common in Asian communities.

There are also household factors at play, such as whether women business owners have a partner or spouse earning a second income, she said.

According to 2009 Census data, non-Hispanic Black women were most likely to be a single head of household with family members present, at a rate of 27.5 percent. Non-Hispanic Asian women were among lowest rates at 7.8 percent.

Weeks noted many female entrepreneurs who are the sole breadwinner for their families report keeping a full-time job while they get their business off the ground.

Despite growth, the average minority women-owned businesses will generate about $86,375 in revenue this year. That compares with $188,124 for non-minority owners. Asian American firms are slightly larger than other minority groups, bringing in about $170,239 per firm on average.

Weeks expects the revenue and employment gap to close as the number of minority women-owned firms continues to grow, though it may take time in light of the slow U.S. economic recovery.